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Monday, May 3, 2010

Economics 03/05/2010: World Debt Wish 6

Final part of the series presents two tables, which are largely self-explanatory.

The first table compares Irish Gross External Debt Liabilities to those of other 36 Most Indebted Countries, reporting these countries' GED as % of Irish GED. No adjustments for GDP etc are taken:You can judge by yourself if Ireland is really economically mightier than Australia, or Argentina, or Brazil and so on...

The second table does two things:First I reproduce the raw numbers for Ireland and for the group of 36 Most Indebted Countries across three categories of debt, total debt and GDP/GNP. I then compute the relative weight of Ireland in every one of these categories. Column 4 in the top part of the table shows the results as percentages. Thus, Ireland's General Government Debt accounts for 0.96% of the total General Gov Debt incurred by all 36 countries. Ireland's banks' debt accounts for almost 4% of the total banking sector debt for all 36 countries - a hefty weight for the country that has GDP share of the Group of 36 that is only 0.37% or GNP share that is just 0.30%. You can judge for yourselves if the private sector (other than banks) in Ireland is really that healthy to carry us out of the recession, but the figure of 5.88% representing the share of Irish real economy debt as a percentage of the real economy debt for all 36 countries is scary! Especially realizing that this makes our economy leveraged to the tune of 1960% compared to the rest of the world. Imagine having that level of LTV on your house?!

The second part of the table above shows Irish debt levels as percentage of Irish GDP and GNP. Our headline figure here is the level of absolute (not relative to other nations) level of leverage - that of 1,326% or x13.26 times if we are to continue imagining that MNCs-dominated sectors really do carry all activities billed through Ireland here in Ireland (in other words, if we are to use our GDP as income measure). Alas, were we to step down to earth and use our GNP as a metric for income, our level of leverage is reaching a frightening 1,617% or x16.17 times annual income. Compared to that, world's most indebted 36 nations have leverage of just 119%!

Still feel like sending some foreign aid to the Highly Indebted Poor Countries (HIPCs)? Or, for that matter, to Greece?

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